It’s a sure bet that Dick Durbin’s political opponents will try to raise a ruckus about revelations the Democrat Senator from Illinois started selling stock and mutual fund shares the day after meeting with then-Treasury Secretary Hank Paulson and Fed Chair Ben Bernanke about bailout legislation. Durbin sold $49,696 of mutual fund shares on September 19th, and bought $43,562 worth of Berkshire Hathaway.
There are already allegations that Durbin was engaged in some kind of front-running or insider trading by making the sale. Without further evidence, this charge just seems silly. You hardly needed to be in closed door meetings with economic planners to be worried about the direction of the markets in the days after the collapse of Lehman Brothers.
The Standard & Poor’s 500 index plunged 4.7 per cent on September 15, the first trading day after the bankruptcy of Lehman. By the end of October, the index had fallen 22.6 per cent. But this widespread selling is hardly evidence that Durbin had inside information. In fact, it’s evidence of quite the opposite—he was panicked just like nearly everyone else.
And that’s exactly what his spokesman says was going on.
“Durbin was doing what a lot of other people were doing, taking a look at their savings” and seeing it “start to tank and trying to preserve some level of wealth by getting out of the market,” said Joe Shoemaker, Durbin’s flack, Bloomberg reports.
If anything, it might be more suspicious if Durbin and other Senators held their investments, knowing that the Bush administration was planning an enormous bailout. Unfortunately, it’s almost impossible to prove insider trading when someone declines to trade based on non-public information. So this is probably a dead end too.